Family-Owned Business Exit Planning Success – Support is Key

By Generational Equity


One of the most meaningful parts of our business as dealmakers is the privilege of helping an entrepreneur realize his or her financial goals via monetizing all or part of their single largest asset. This is a responsibility we as an organization take seriously. The difference between an investment bank on Wall Street doing deals and The Generational Group is that we deal with real people, real families, sometimes third and fourth generations of family-owned companies, that are comprised of emotions, history, and community relations that form deep bonds.

We also understand how challenging it can be for a majority owner of a family company to convince multiple minority owners, who are usually also family members, that now is the time to exit the business and transition to new ownership. This can be tough even if the person is the sole, 100% owner of the family business; lots of other folks are affected by the decision.

For this reason, we spend quite a bit of time with our clients and usually with their spouses even if they are not legal owners ensuring that everyone is mentally and emotionally prepared for the 9-14 months it takes to close a deal and for the “roller coaster of emotions” it will be, as described by one of our clients, to actually close a transaction.

As mentioned a few weeks ago, Axial, a leading online platform that introduces capital providers with business owners and buyers, published a fantastic whitepaper entitled “The CEO’s Guide to a Successful Exit.” The strength of this whitepaper is due to the fact that it is based on input from a number of Vistage coaches. In case you are not familiar with Vistage, it is a fantastic, peer-based CEO educational group, providing local chapters with speakers who are experienced in developing and mentoring business owners.

One of the points they make in this study is how important it is to get support at home BEFORE and DURING an exit event. This is how they so aptly describe it:

Kirk Dando of Dando Advisors in Fort Collins, CO – “Be real with your family about how hard a process this will be. There are seasons when you are busier than others, and this process may go on for a year or more. You need people to support you in that. If you don’t have that support, it can be very difficult.”

Ken Proctor, a Vistage Chair in Houston, TX – “I am a firm believer that if you have problems at home, it can bleed into your work and vice versa. I mix business and home because there’s no such thing as work-life balance. It’s integration. It’s all life.”

Years ago I asked a seasoned dealmaker what the key was to his success. His answer surprised me. He said, “I am more of a marriage and family counselor than a dealmaker. My primary role in working with family-owned businesses is to keep marriages intact and family members supporting and communicating with one another over a very long, tedious, challenging process.”

This is very interesting way of looking at what our dealmakers do best: Keeping business owners, family members, spouses and other related parties focused on the exit’s long-term goals – liquidity, security, solvency and long-term financial stability. As many business owners have told me over the years, the sense of relief the day the deal closed was overwhelming but getting there, wow, what a journey!

As the Axial study concludes: Get support at home! Make sure that every person with a vested interest, whether it be directly as a partial owner or indirectly as a support person in your family, is on board with your decision. If you don’t have the cohesion, trust me, odds are way too good that you will end up not closing your transaction or even worse, damaging key relationships along the way.

The good news is that our Generational Group M&A professionals have decades of successfully dealing with family-owned businesses and their dynamics. In a sense, we have lots of marriage and family counselors on staff. If you would like to learn more about our services, you, your partner, and your spouse(s) should attend one of our exit planning workshops. We hold these regularly throughout North America. If your business qualifies you to attend, you should invest a day with us. To learn more about our services/workshops/family counseling, follow these links:

By Carl Doerksen, Director of Corporate Development at Generational Equity.

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